The aftermath in a nutshell: The campaign is now stopped, Google is embarrassed, apologizes and penalizes the Japanese site with a PageRank reduction.

Just a few hours after the Japanese version of the TechCrunch article went online Tuesday, Google Japan issued a half-baked, vague apology on the official Google Japan blog, basically saying the Japanese subsidiary was unaware of their own terms of service. The campaign was halted and Google Japan ordered their outside PR agency to remove all existing paid postings in question.

An email Google Japan sent out to bloggers asking for a comment states the following (the second half of the last sentence is a winner):

Our internal guidelines have been violated in two ways:
First, the blog posts were connected to Google (via the outside agency which we contracted), but failed to fully disclose that relationship. Our internal guidelines are committed to transparency, and this was not sufficiently transparent.

Second, we have strict rules against doing anything that would
artificially promote the ranking of our own sites — or even be
perceived as artificially promoting their ranking. Having outside
blogs write about our gadget and linking to our site may have had an
impact on our own ranking, which is not acceptable under our
guidelines.

At Google, we believe in being open and transparent with our users,
and do not condone these kinds of opaque communications. We would
like to apologize for this episode, and express our gratitude to the
community of users and bloggers who brought this to our attention so
that we could put a stop to it.

But the apologies obviously weren’t enough as Google has imposed a PageRank penalty upon itself, busting down the rank from 9 to 5 (Google.com has a PageRank of 10, while TechCrunch still stands at 8). Matt Cutts, head of Google’s anti web spam team, tweeted that he expects Google Japan’s lower rank to remain as is for a while.

Considering that Google stopped the campaign after a little more than 24 hours, the funding was openly acknowledged in the posts and apologies were issued, the self punishment may appear a bit too harsh at first sight. But Google is actually just replicating a punishment strategy it pursued against other sites that violated company policies in the past (Google Japan’s PageRank hasn’t been reset to zero, however).

I doubt Google will lose any significant search traffic in Japan in the process, but think the measure is better than no measure at all. It should be OK now anyway as the company has been heavily scoffed at in the last few days and will probably have to live with a damage to its image for a while. But it’s Google, after all, and worse things than this PR meltdown could have happened.

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Nielsen Japan reports that in October 2008, Yahoo Search saw a total of over 3.5 billion page views, while No. 2 Google trailed with 2.6 billion page views. According to a Comscore Japan ranking released in September 2008, Yahoo ruled the Japanese search engine market with a share of 51.2% (Google reached 39.0% in that month).

It’s not that Google isn’t trying. In recent months, the company rolled out a number of online ads, offline promotion campaigns and several Japan-only services (Picasa recently started offering QR codes for easy mobile access, for example). And today it came to light they are now paying bloggers to write nice things about Google – a marketing tool TechCrunch never really was a big fan of.

Here is the background:
On Thursday last week, Google Japan revamped the top page and included a new, Japan-only “Hot Keywords” section displaying the top 5 search terms currently googled in Japan (see screenshot below).

Users have been able to add a gadget containing the top 10 hot keywords to iGoogle for months and now can also integrate the list into their blogs as widgets. In its current form, Google Japan looks more like a portal site than any other version worldwide, a product strategy obviously aimed at disputing Yahoo’s standing.

But that didn’t seem to be enough, as the Japanese blogosphere today is filled with reports about Google hiring Cyberbuzz, a Tokyo-based Internet marketing company to promote the keyword feature (its widget version) with a pay-per-post campaign. And in fact, the search string “Google Hot Keywords Ranking+Blog Widget+CyberBuzz” in Japanese in Google’s own Blog Search leads to a few dozen results, indicating the reports aren’t made up of thin air. This blogger, for example, integrated the keyword widget and praises the list as being very useful to be kept up-to-date on what is going on in the world. This one says the keywords change every 20 minutes and that the new Google feature once quickly helped in obtaining information on a Japanese TV star. All postings end with a disclosure that says: “I am taking part in the Cyberbuzz campaign”.

It’s interesting to see that Google, a company that not too long ago radically took action against PayPerPost bloggers in the US, today thinks the concept is suitable as long as it helps them advance in Japan (even though in Japan, pay-per-post isn’t regarded nearly as obnoxious as in the US).

Google Japan’s new president Koichiro Tsujino last month suggested the company will, as Yahoo brilliantly did in the past, try to establish itself as a homegrown brand by putting a stronger emphasis on localized marketing and product strategies. But whatever Google has up its sleeves, pay-per-post campaigns surely are not enough to take over Japan from Yahoo.

Via Asiajin

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Advertisers pay on a cost-per-thousand-impression basis, and the ads are promised to be delivered to relevant audiences based on keywords. That means Be-A-Magpie will analyze the content of your Twitter messages to see if there is a match to particular advertisers.

The TechCrunch Twitter account, with 31,000 followers, can earn a whopping €14,410.51 per month, it says.

The service auto-determines the number of ads to insert per legitimate Twitter message – the default is one ad for every five Tweets. The service inserts the ads automatically by storing your Twitter credentials. As for disclosure – well, there really isn’t any. A #magpie hashtag is added to each Tweet, but that’s it.

It’s not clear if Twitter will object to this. Their terms and conditions don’t specifically exclude it, but an amendment may be in order. There is a good discussion here, started by Robert Scoble, on whether it should be banned.

Users may not be so forgiving though. I imagine anyone who starts to use this will see a sudden decline in followers rather quickly.

You can tell who’s already signed up for the service – the company is using those accounts to spread word about itself virally:

Update: Credit where it’s due: Ben Kessler appears to be the first to call PayPerPost on Be-A-Magpie.

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Social Spark brings the PayPerPost scheme into a candy colored social network. There’s little need to describe all the features as there’s nothing really innovative: think MySpace or Facebook but in bright colors. The key difference is the focus on shilling; center stage is offers for paid posting, including most popular offers and most recent. Each offer includes which members of PayPerPost/ SocialSpark recently visited it and posties can leave props for each offer.

One thing that did surprise me is that SocialSpark is also offering “sponsorship opportunities.” These would appear to be as they suggest, simple place a box on your site and get paid sponsorships that would be entirely legitimate and without moral qualms to most people.

The key difference to PayPerPost before it is that offers taken up in SocialSpark must include link=nofollow links, start with a disclosure, and should be neutral in tone: still shilling, but less evil.

The service is currently in closed alpha testing and running behind schedule (it was originally scheduled for a January launch) so perhaps this explains the complete lack of offers available on the site. Most of the paid opportunities come from IZEA itself and not third party advertisers.

SocialSpark isn’t my thing (nor Michael’s), but others may disagree. Screen shots as follows:

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According to CEO Ted Murphy, the service has been suspended due to “elevated levels of abuse on Zookoda.com” and goes on to explain that the service is being used by spammers. For those that think that PayPerPost pollutes the blogosphere with spam content, the following from Murphy is rich with irony:

We hate spam. Honestly, I don’t think I’ve ever met anyone that really enjoys spam. Some people hate spam even more than we hate spam and those people complained to our network hosting service. Our network hosting service REALLY hate spam….We’re not spammers, we don’t support spammers and we do support everybody’s freedom of choice when it comes to opting in and out email lists.

Murphy suggests that the service will return in January, but we’re putting it on deadpool watch; Zookoda has been failing for months. Most Searched reports that the service started deteriorating when IZEA took over and had gotten to the stage where it simply stopped sending out email distributions in early December. Erno H on LinkedIn reports similar problems. An email distribution service that doesn’t provide email distribution is a business with nothing going for it.

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PayPerpost, now called IZEA, is in the process of launching RealRank, an alternative way to rank blogs. But their advertisers are still looking for blogs with an actual PageRank to write about them (this helps with the SEO effort). The result? Freaked out PPP shills who are going to have to find a real job.

Bloggers are expressing their angst on forum thread. Among the more pathetic messages:

Oh. My. God. Oh my god! I can’t believe this is happening. I NEED to earn money with my blogs, I’m going to have to take every single opp I qualify for every day in order to keep up with expenses.

and this, from someone lamenting a negative comment on their blog (the second paragraph is a winner):

I’m trying to develop a thicker skin, I really am. But this is my livelihood, you know? This is important to me. When I started with PPP, I never thought I would still be doing it seven months later, or that I would care about it so much.

And since when is independence and paid blogging mutually exclusive? There is choice involved.

So much for the claims by PayPerPost that their bloggers only write about products they actually believe in. PayPerPost isn’t dead, but a big chunk of their advertisers are clearly bailing now that the SEO value of paid posts is gone. That’s bad news for the shill blogs that rely on PPP to pay the bills, but good for the blogosphere in general.

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In 2006 PayPerPost CEO Ted Murphy emailed to ask if we’d take their ads on TechCrunch. We said no and that was the end of it. Yesterday I heard from Ted again on the subject of advertising. His company, which has been renamed IZEA, wants to advertise their new RealRank service on TechCrunch.

For anyone unfamiliar with PayPerPost/IZEA and our position on them, it comes down to this: We think the core product is deeply flawed and we’ve said so many, many times. Over time the company has made policy changes that have mitigated some of the biggest issues we and others have with them. For example, they now require disclosure of paid posts, although we take issue with some of the language and the placement of the disclosure.

They are the blogging world’s pariah and are fairly routinely trashed for, as I put it, polluting the blogosphere. For more on our posts on them, see their Crunchbase profile. Here’s our first post on PayPerPost, which is representative of most of our coverage. If you have a spare couple of hours (and you’re tired of watching my sweet dancing moves), you can read all of our coverage of the company here.

Anyway, the company now has other products which we have no particular issue with (example), and RealRank, a new way to rank participating blogs since Google has basically kicked them out of the Internet, is one of them.

We’ve asked Ted if he minds us asking our readers what they think about taking advertising from IZEA on TechCrunch, and he’s agreed. So the question is, do we accept advertising from IZEA for RealRank? The poll is below. If you say it’s a bad idea, we won’t accept it (and Ted says he wouldn’t want to do it anyway since it wouldn’t be received well). If you say yes, we’ll take it.

Two quick additional points. First, yes I know that simply writing this post is a way of promoting PayPerPost. But we’re not linking to them here, and I’m pretty sure Ted isn’t super pleased with all the links to the negative posts we’ve written. Second, it should go without saying that even if we accept their advertising, it isn’t going to affect our editorial coverage of the company. In fact, I may go more negative just to prove we’re neutral, if that makes sense.

What’s your opinion? The poll will remain open for around 24 hours, and we’ll update with the final vote. If you’re wondering how I’m voting on this – well, the very first vote is a “no.” :-/

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IZEA (the new holding company for PayPerPost) CEO Ted Murphy is not surprisingly calling foul on the move, claiming that it’s part of some sort of censorship conspiracy by Google. Better still Murphy claims that it’s part of Google’s attempts to deny competition because PayPerPost is a “a very attractive alternative” to Adsense.

Murphy goes on to claim that TechCrunch should be punished because our occasional posts thanking sponsors (like this one) is nothing different to what PayPerPost bloggers do.

WTF?

TechCrunch, like many blogs occasionally puts up a post (usually monthly) highlighting our great sponsors, but lets look at one of these posts. They nearly always include the words “TechCrunch Sponsors” in the post title, and are very clear that its TechCrunch thanking our sponsors (”Thanks TechCrunch Sponsors”). There is zero editorial on the benefits for or against the sponsors such as PayPerPost, and it’s clear what the post is about, unlike your typical PayPerPost blog post. We also don’t take money for writing editorial content; TechCrunch publishes posts for and against without favor, where as your typical PayPerPost blog distorts the line between truth and paid advertorial.

Unlike Michael I’ve never been as strong in my dislike of PayPerPost, and although I’ve never used the service myself (I did sign up for an account when they opened so I could review the service) I’m all for exploring different ways for the little guy to make money, even if personally the ethics and morality of PayPerPost has never sat well with me. Yet if PayPerPost ever wanted friends, wild conspiracy centered posts such as this one just say “mad” to me. This looks and smells like a company that is not in a good way, a company that is lashing out as its business model starts to fail around it. I’m predicting Deadpool within 12 months; I can’t see a lot of bloggers being happy with losing Pagerank so we should see an exodus of bloggers out of PayPerPost (particularly ones with traffic) over the next few months. This will leave PayPerPost with inventory deficiencies that will result in diminished revenues making the PayPerPost business model unsustainable going forward.

thanks to Trace for the tip

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Bloggers and advertisers (the company says they have over 85,000 bloggers and 11,000 advertisers) will create profiles. Users visiting the site will then “browse the public profiles of advertisers and bloggers along with their associated sponsorship and blog related data.”

”It’s the first social network that is designed from the ground up to be advertiser-centric, while preserving the free, managed flow of user information common within other networks” said CEO Ted Murphy.

The translation, as far as I can tell, is that SocialSpark is a place for advertisers to interact with bloggers who are willing to take pay per post type advertising and run with it. Get to know them, see how big their audience is, whatever. There’s absolutely nothing distasteful about it as an idea. But to the extent it furthers the pollution of the blogosphere by encouraging more paid shilling, it makes us all worse off.

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Like the popular site TinyURL, URLbrief lets people exchange a long, difficult to communicate URL for a short one. They’ve added a couple of bells and whistles – The URL creator can link to multiple destination URLs and visitors are taken to one of the links randomly when they click. Also, users can see stats on how many clicks the link is getting and browser data on the people clicking.

The service seems completely unrelated to the main business of PayPerPost, which pays bloggers to write posts about advertisers.

But…and I’m thinking out loud here: Those posts always include links back to the advertiser, so perhaps they will use URLbrief to direct that traffic. This seems counter intuitive, since advertisers want the links to go directly to them. But rumor has it that Google has been trying to find ways to penalize PPP blogger links. Perhaps this is a way to minimize any collateral search engine damage from direct links. The stats feature of URLbrief also provides good, verifiable data back to PPP as to how many people click the links, which may help them monetize advertisers more effectively.

Who knows. No conspiracy theory is too outlandish when it comes to this company. All I know is, they’re up to something, I’m sure. There are way too many services out there just like this, and there is absolutely no revenue model around this service. Their blog post on the new product is here.

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A couple of weeks ago we wrote about how CEO Ted Murphy took all employees on an all-expenses-paid offside to Club Med, where they got drunk, inexplicably dressed up as Native Americans (complete with red face paint) and then posted video of the whole racially offensive episode on the web.

Now this: Today we were sent an ongoing email string between PayPerPost and an engineer, Lawrence Salberg, who was steered towards the company by a headhunter. After an underwhelming interview the candidate did some research and wrote back to the headhunter that he was not interested in the job, and in fact that he was so upset that he wasted his time that he didn’t want to hear about any of the headhunter’s other opportunities, either. “Remove me from your candidacy system immediately,” Salberg said in a long email outlining the reasons he would not work at the company.

That should have been the end of it. But the headhunter forwarded Salberg’s email to PayPerPost VP Software Development Peter Wright (Update: See here), who went on the attack. “I’m shocked at some of the statements in your email to Lori” Wright said in an unsolicited email to Salberg. Other gems aimed at the job candidate:

• As for this company having no future, have you done ANY research at all?
• First you say that the only people that would work at such a company are those with no brains, no self confidence, etc etc. I take offense at that.
• The thing that amuses me most about your post though is how easily you are swayed by loud noises.
• I wish you the very best of luck in your search for a “career.”
• I know there are lots of safe little environments out there with well structured corporate ladders that you can happily spend your days climbing and climbing until eventually you retire.

Wright also spends time boasting about his own accomplishments, saying:

I’m a best selling author. I wrote the world’s best selling VIsual Basic book (and 13 others) and had a very happy career as a consultant specializing in Microsoft technologies that took me all over the world.

And so on (the entire string is available here as a pdf – it includes a number of attacks on TechCrunch as well). Wright defends the abilities of his team and technical management, which have previously been criticized as lax and unprofessional.

It’s never professional to go on the attack when someone declines your job offer. With a company as controversial as PayPerPost, there’s also a good chance the embarrassment will be forwarded to the press. The lesson here – be very careful before you take a job at this company, and if you decline, don’t even think about giving your honest opinion. And if you’re a startup looking for a smart engineer, Lawrence Salberg is still on the market.

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The company has been chronicling their startup days on a video blog called RockStartup. There have been some embarrassments before with the video blog – such as when a viewer noticed that the company had purchased $700 chairs for employees with investor capital and then yelled at a painter for standing on one (CEO Ted Murphy, pictured above, later said the chairs were purchased used).

But the most recent episode is where the company really takes the cake. All employees of the company were taken on an all-expenses-paid trip to Club Med, where as far as I can tell they spent their time getting drunk and dressing up as Native Americans, complete with lots of red face and body paint (something many Native Americans find both racist and offensive, and which has been equated to Blackface). The company also hired something called a “Creative Thinking Coach” to guide them through the whole experience.

The only question I have is…Did Draper Fisher Jurvetson, the main VC behind PayPerPost, really greenlight this debacle?

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It is generally a bad sign when a company is not able to bring in a new investor for a financing. The company and existing investors generally like to do so because it brings in fresh connections and ensures that a new third party is involved in valuing the round. When a company does a second round with the same investors, it can be (but isn’t always) a sign that the company is in trouble. In Pay Per Post’s case, the simplest explanation would be that most VCs want to keep their hands clean. Getting involved with PayPerPost could hurt their reputation and exclude them from other deals.

Listen to our podcast interview with founder Ted Murphy and investor Josh Stein here. The company’s profile is here.

Update: An email from Josh Stein at DFJ which points out an inaccuracy above and provides a believable reason for the makeup of the round:

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Previously, bloggers perused listings on the PayPerPost website, looking for opportunities to make a few extra dollars. Now, bloggers can set their own minimum price when creating a widget, and let advertisers come to them directly.

This feature subtly shifts the way the company approaches the market. The current system has advertisers paying a set fee per post regardless of the differences in blog size or authority. The result was a low average fee of a $5 or so, which didn’t attract the larger blogs. Now that bloggers can set their own price and engage with advertisers one-on-one, we may see a few of the larger ones begin to use the service. Competitor ReviewMe has a similar approach that pays large blogs more, although the price is based on an algorithm.

PayPerPost keeps 10% of fees generated through the Direct product. Their standard fee on their normal product is a 35% cut.

We’ll wait and see if any of the large blogs adopt this anytime soon. PayPerPost is still deeply flawed – it allows advertisers to demand positive writeups, and they do not require bloggers to disclose within the post itself that it is sponsored text.

Look for a press release later this week. An overview video is available here.

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We wrote about Zookoda last year, and the company put the product up for sale last September. There were reportedly a number of offers for the service when it was originally put up for sale, but the asking price of US$500,000 was too rich to close a deal. Now, nearly seven months later, PayPerPost has stepped in to acquire the company. PayPerPost is not disclosing what they paid for Zookoda, although CEO Ted Murphy did tell me it was a cash deal.

PayPerPost previously announced the acquisition of Performancing only to back out of the deal a week later. Murphy assured me that the Zookoda acquisition won’t suffer the same fate.

PayPerPost says that Zookoda has 10,000 blog customers sending emails to 2.3 million people. Like the Performancing deal, PPP will want to market their core service to those 10,000 bloggers. Murphy tells me that they are also looking for new distribution channels for their content, and email is a natural fit. PPP bloggers will probably soon be seeing pitches to join the Zookoda service, perhaps with the promise of higher payouts when they post.

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BegForPost promises none of the ethical hassles of PayPerPost. There’s no payment, just begging for coverage:

You’ve worked for months building a startup on a boostrap budget and the launch is near. How will you get an initial influx of traffic to propel your product/service into viral bliss? Don’t pay off bloggers to promote your startup, beg! Getting started is quick and easy. Fill out the form below, sit back, and wait for Internet stardom. You’re almost there!

* Completely free
* No chicken hats
* No conflicts of interest
* No annoying reality show
* No direct deployments to production
* No premature acquisition announcements

The first “begger” is Sparkmeter a “tool to help cut through the ‘08 election news.” They requesting a review on TechCrunch. Nice.

Our previous PayPerPost coverage is here. I expect a cease & desist letter from PPP to BFP to be arriving momentarily.

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The Blog Herald got a good first look, and notes that it differs only in the details from the other services. Disclosure is required. Bloggers can choose to write a positive or negative review. And, in a business model change, it looks like bloggers can set their price (PayPerPost lets advertisers set the price, and ReviewMe sets the price automatically based on how popular the blog is).

Unlike the others, SponsoredReviews gets right to the point on their home page. While none of the other sites will admit that search engine rankings is a big part of these scams, SponsoredReviews lists it right on their home page as a benefit to advertisers. At the end of the day, these advertisers won’t care all that much what exactly these blogs say, as long as they are linking back to their product. This is something I couldn’t get PayPerPost to quite admit in my podcast interview with them late last year.

So the third party costs are becoming pretty clear: misled readers, search engine pollution and credibility questions around the entire blogosphere. All for a few dollars a post.

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In a post on the PayPerPost blog today, the company said “We…dug into the Metrics platform and regretfully found that it wasn’t what we were looking for right now.” That came just a week after the official announcement of the acquisition.

Generally speaking, responsible companies “dig into” the acquisition target before they announce a deal.

Whatever happened, this isn’t pretty. After the deal was announced, Performancing moved their non-acquired assets to a new domain name and re-launched that service. They certainly stopped talking to other potential acquirors, given that the deal was officially announced. In merger-land, this is what’s known as “being left at the altar” because everyone down the road who you talk to will want to know why the previous deal exploded.

Performancing should have had a more nailed down acquisition agreement, so they aren’t entirely blameless. But PayPerPost is becoming an increasingly ridiculous startup, and a black eye for investor Draper Fisher Jurvetson.

Our previous coverage of PayPerPost is here.

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The main purpose of the acquisition appears to be for PayPerPost to get access to the 28,000 Performancing users, most of whom are bloggers and potential customers of PayPerPost. The popular Performancing Firefox blog editing plugin is not being acquired, and will be spun off into a new brand.

Our previous coverage of PayPerPost is here.

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This isn’t a perfect fix for PayPerPost – advertisers can still require a positive post about their products, and the disclosure does not have to be within the post itself. The blogger can choose to “prominently” display an accurate disclosure policy on the site in lieu of disclosure within the post itself, although the disclosure policy being recommended by PayPerPost states that paid posts is the same as any advertising on a site. Still, it is a big move in the right direction.

In many ways this move reminds me of Plaxo’s decision to stop spamming non-customers after a barrage of criticism. In this case, the move seems to stem more from the threat of government regulation. Regardless, we applaud the change.

Our previous posts on PayPerPost are here, and a podcast interview with the founder and one of his venture capitalists is here. Also see our coverage of competitor ReviewMe.

The press release is below.

ORLANDO, FL – (DATE) – PayPerPost, the leading marketplace connecting marketers with bloggers, videographers, photographers, podcasters and social networks, announced the second phase of its full disclosure model, whereby participating Consumer Content Creators are required to disclose their sponsored status. The new Terms of Service, effective today, will bring greater transparency to the growing Consumer Generated Advertising industry.
Since creating the concept of sponsored posting, PayPerPost has allowed and encouraged transparency, enabling marketers and bloggers to disclose word-of-mouth (WOM) or buzz marketing relationships. The company provides bloggers with tools to empower disclosure and has popularized the concept of adopting a Disclosure Policy for all bloggers through http://www.DisclosurePolicy.org. Consistent with WOM industry guidelines, PayPerPost also prohibits marketers who use the PayPerPost marketplace from requesting no disclosure. Today’s announcement builds upon that foundation.
“The mission of PayPerPost has always been to be the top marketplace connecting bloggers and marketers,” said Ted Murphy, chief executive officer of PayPerPost. “We have always believed that the marketplace will naturally evolve based upon needs of the marketers and bloggers participating in the market. Proper transparency for WOM marketing has been an ongoing balance for our members and an issue with little legal precedent. Although the FTC was petitioned and recently declined any formal action against buzz marketing practices (e.g. Proctor & Gamble Tremor, BzzAgents), we believe the marketers and bloggers in our marketplace will benefit from today’s Terms of Service updates. We will undoubtedly lose some marketers and bloggers in the process, however we believe this measure serves our marketplace participants long term.”
As part of this announcement, we invite a competing and even larger part of the WOM marketing industry, affiliate marketers, to join PayPerPost in mandating full disclosure. Mary Engle, FTC director of advertising practices, recently stated “the FTC examines a number of criteria in deciding whether to bring a case against a marketer but usually looks more closely at actions that lead consumers to make purchase decisions. Some word-of-mouth marketing is focused on getting consumers to visit websites rather than to make immediate purchases.” Given that affiliate programs, regardless of FTC disclosure adherence, specifically reward bloggers for driving immediate purchases, affiliate marketers are encouraged to mandate disclosure, or embrace WOM marketplaces like PayPerPost that deliver the highest online marketing ROI with less risk of future FTC scrutiny.
PayPerPost’s new Terms of Service require participating content creators to fully disclose site wide with a prominent Disclosure Policy or on a per post basis. To cover the increased blogger and marketplace costs of the company’s new policy, PayPerPost is raising the minimum price per post by one dollar to five dollars per post. The company’s marketplace remains the lowest cost, highest value provider of online WOM or buzz marketing. “PayPerPost believes that its marketing partners will support this new pricing structure. Although our operating costs will increase slightly due to today’s move, the net result is a stronger communications environment for all. We encourage online WOM networks of all kinds, whether blog-based, affiliate or other models, to follow suit.”

About PayPerPost:
PayPerPost is the leading marketplace for Consumer Generated Advertising. The PayPerPost platform connects advertisers and Consumer Content Creators to deliver compelling marketing messages. The marketplace is fueled by the self expression of bloggers, videographers, photographers, podcasters and participants in social networks. PayPerPost is easier to use than paid-search or display advertising and provides more powerful features. The company is venture funded by Inflexion Partners, Village Ventures and Draper Fisher Jurvetson. Advertisers, Consumer Content Creators and partners are encouraged to join the revolution at www.PayPerPost.com.

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We are working to obtain the opinion to see how this might affect the PayPerPost business. This might force their hand and require their bloggers to disclose when they promote products for a fee.

Our previous PPP coverage is here.

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RockStartup seems to be heavily influenced by the movie Startup.com, which tracked Kaleil Tuzman and his team (and multiple girlfriends) through a web 1.0 startup. Some of the scenes in the first two episodes of RockStartup are near duplicates of scenes from Startup.com. Of course, RockStartup is being consumed real time, whereas Startup.com wasn’t released until after the company folded.

I can’t wait for the episode where Ted (the founder) goes to jail.

I’m not going to go into the whole payperpost argument again. Not after seeing a naked guy in bed trash me on YouTube. If you want to know my opinion on PPP, see our previous posts and listen to our interview with the founder after their financing.

Update: “PayPerPost are offering bloggers like myself cold hard cash to voice their opinions about a TechCrunch story posted by a dude called Mike.” Incredible.

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ReviewMe has a somewhat different model that PayPerPost. Where advertisers on PayPerPost set a single fee that is paid to all bloggers regardless of their size, ReviewMe uses an algorithm based on Alexa, Technorati and other statistics to determine the importance of a blog and charges a different fee for each blog based on the calculation. Blogger payments range from $30 – $1,000 per post.

Also, Bloggers must disclose that the review is a paid advertisement. They can do this in anyway they choose, ie “The following is a paid review:” “Paid Advertisement:” etc. This is another improvement over PayPerPost, which is heavily criticized because it does not require disclosure.

Finally, advertisers can purchase posts, but they cannot require that a post is positive. The blogger can choose to write their honest opinion without fear of not being paid. The only requirement is that the review must be a minimum of 200 words.

In an email exchange, a company spokesperson said “We are planning on burying PayPerPost.” While we do not endorse this business model, we do note that ReviewMe has removed the most egregious aspects of the PayPerPost business model: no disclosure requirement, and a requirement to write a positive post.

ReviewMe is eating their own dog food by giving away $25,000 today to pay bloggers to write about the service.

In related news, see Steve Rubel on a new startup called LoudLaunch. As I said before, this pay-to-shill business model is spreading like a virus.

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Don’t look for PayPerPost to require blogger disclosure anytime soon. Instead, they are creating a distraction, designed to keep the buzz about PayPerPost going strong, as well as to move people’s attention away from the core issue of blogger disclosure of product shilling.

In a move reminiscent of big tobacco funding tobacco research, PayPerPost is announcing a new initiative on Monday called DisclosurePolicy, which “provides policy creation tools, best practices and forums for discussing the delicate balance between content creator freedoms and audience transparency expectations.”

DisclosurePolicy creates a disclosure policy for bloggers to post on their blogs, based on their answers to a few questions. They will also pay every blogger who posts a PayPerPost disclosure policy on their blog $10.

While that sounds like a fine idea, PayPerPost bloggers should also be disclosing the fact that they are being paid for their post prominently within the post, not on some separate page in their blog. Also PayPerPost subtly works with the language they use, particularly around the definition of “compensation” to suggest that all blogs have bias (and therefore PayPerPost isn’t really that bad). Here are the three choices – bloggers must choose one:

This blog does not accept any form of advertising, sponsorship, or paid insertions. We write for our own purposes. However, we may be influenced by our background, occupation, religion, political affiliation or experience.

This blog does not accept any form of cash advertising, sponsorship, or paid topic insertions. However, we will and do accept and keep free products, services, travel, event tickets, and other forms of compensation from companies and organizations.

This blog accepts forms of cash advertising, sponsorship, paid insertions or other forms of compensation.

If you are a PayPerPost blogger, or the New York Times, or anything in between, you must pick the third option. That’s because “taking advertsing” and “paid insertions” are defined as the same thing. And even if you have no form of advertising or other revenue on the site, you have to admit to bias based on “background, occupation, religion, political affiliation or experience.”

Blurring the lines in this way – facilitating the pollution of the blogosphere while creating an illusion of doing something good for the public, is a good business move for PayPerPost. But it is a terrible development for the blogsphere and public trust. I hope that very few bloggers are suckered into going along with this.

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The PayPerPost model brings up memories of payola in the music industry, something the FCC and state attorney generals are still trying to eliminate or control. Given the distributed and unlicensed nature of the blogosphere, controlling payoffs to bloggers will be exponentially more difficult.

Our position on these pay-to-shill services is clear: they are a natural result of the growth in size and influence of the blogosphere, but they undermine the credibility of the entire ecosystem and mislead readers.

ReviewMe is backed by Text Link Ads, a long time TechCrunch sponsor. It has not launched yet but was announced earlier today. Like PayPerPost, ReviewMe is a marketplace that allows advertisers to pay bloggers to write about their products. There are some significant differences in the business model, though. Where advertisers on PayPerPost set a single fee that is paid to all bloggers regardless of their size, ReviewMe uses an algorithm based on Alexa, Technorati and other statistics to determine the importance of a blog and charges a different fee for each blog based on the calculation. To their credit, ReviewMe requires bloggers to disclose that they are being paid for the post, and advertisers cannot require a positive post (PayPerPost makes disclosure optional and advertisers can require positive posts).

While we applaud the fact that ReviewMe requires disclosure and prohibits advertisers from requiring a positive post, we still think the very act of paying bloggers to write about a product is a very bad idea. Frankly, we’re not happy that one of our sponsors has launched this type of service, and we’ve notified them that we will not allow promotion of ReviewMe through TechCrunch.

CreamAid launched earlier this week. The service is similar to PayPerPost but requires bloggers to include a Flash widget in the post that links to CreamAid and also shows other blog posts that have discussed the product. There does not seem to be a requirement that bloggers write positively about a product, but there are few details on the site. Part of the goal of CreamAid seems to be to build a social network around paid posts using this widget.

My hope is that PayPerPost quickly requires disclosure by bloggers and eliminates the ability for advertisers to require positive reviews. It’s clear that simply stating we don’t like these services isn’t going to make them go away. VCs are now involved and PayPerPost has a large number of bloggers on their payroll that are willing to attack anyone that says it’s a bad idea. Given the very low likelihood of government involvement similar to the effort to eliminate payola in the radio industry, I’m not really sure what can be done to reverse the trend. In the end, individual bloggers will have to establish and maintain their own credibility.

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